The Texas Comptroller ruled that a cotton gin operator could buy electricity exempt from tax.

A cotton gin separates cotton fibers from cottonseed. This is a step in the process to manufacture raw cotton into products such as fabric and cottonseed oil.

Texas exempts electricity used in manufacturing. A taxpayer that buys electricity through a single meter must show that the electricity is predominantly used for manufacturing. A taxpayer can use an industry-wide utility study to show this. Texas has already accepted such a study for electricity used in cotton gins. As a result, the cotton gin operator could buy electricity exempt from tax.

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